NZ dollar rises to 9-mth high on German confidence, Fed hope

Dec. 12
(BusinessDesk) – The New Zealand dollar rose to a
nine-month high as hopes Germany will avoid recession and
optimism the Federal Reserve will enact more easing measures
helped stocks rally and lift risk sentiment.

The kiwi
dollar climbed to 83.83 US cents from 83.43 cents at 5pm in
Wellington yesterday. The trade-weighted index rose to 74.84
from 74.66.

The euro gained and stocks rose across Europe,
with the Stoxx 600 Index gaining 0.3 percent, after
Germany's ZEW Center for European Economic Research said its
index of investor and analyst expectations rose to 6.9 in
December from minus 15.7 last month, beating expectations.
The rally extended onto Wall Street and the Standard &
Poor’s 500 Index gained about 0.9 percent on speculation
the Fed will announce a fresh round of quantitative
easing.

Germany is “the bright spot in Europe,” said
Mike Jones, strategist at Bank of New Zealand. Improved
investor sentiment “suggests Germany may yet avoid a
recession. The rally started in Europe and spilled over to
the US.”

Whether growth-linked assets rally more on a
Fed announcement of further easing may depend on the size of
the programme, Jones said. The kiwi may be approach 84 US
cents today and find support at around 83.60 cents, he
said.

Underlining the need for further stimulus for the US
economy, figures showed the trade deficit rose 4.9 percent
to US$42.2 billion in October and Imports fell to the lowest
level in 1-1/2 years and exports suffered the biggest
percentage drop since January 2009.

BNZ expects the
Fed’s Operation Twist to be replaced by between US$25
billion and US$45 billion a month of outright Treasury
purchases and continued buying of mortgage-backed
securities.

The kiwi slipped to 64.46 euro cents from
64.51 cents yesterday and gained to 52.02 British pence from
51.89 pence. The local currency rose to 69.18 yen from 68.70
yen.

Trending Now

Quotes are real-time for NASDAQ, NYSE, and NYSEAmex when available. See also delay times for other exchanges. Quotes and other information supplied by independent providers identified on the Yahoo! Finance partner page. Quotes are updated automatically, but will be turned off after 25 minutes of inactivity. Quotes are delayed at least 15 minutes. All information provided "as is" for informational purposes only, not intended for trading purposes or advice. Neither Yahoo! nor any of independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. By accessing the Yahoo! site, you agree not to redistribute the information found therein.